Beachcomber supporters pack Waldport council meeting to protest permit suspensions

 

By QUINTON SMITH and GARRET JAROS/YachatsNews

WALDPORT – Citing what it believes are “financial irregularities,” the city of Waldport says it has stopped its permission for Waldport Beachcomber Days to use city property until the nonprofit clears up questions on a variety of funding and legal reporting issues.

More than 50 Beachcomber volunteers and supporters packed a city council meeting Thursday to criticize city manager Dann Cutter’s handling of the issue — but also outlining the steps it is taking to clear up financial questions.

In the last three years, the nonprofit has become the largest and most visible civic group in town, revitalizing and organizing the three-day Beachcomber Days celebration each June, the Waldport Wednesday Market, a Halloween Trunk-or-Treat event, and a variety of Christmas activities each December.

In a news release announcing the action last week, Cutter said “We ask everyone to be patient and not rush to judgment. These volunteers are our neighbors and friends – please let the process work.”

But the statement also said that Beachcombers’ financial reports and disbursements “create concern regarding Waldport Beachcomber Days’ qualification as a 501c3 charity organization and are in direct violation of IRS rules.”

“As such, the city has notified the Beachcomber board president of these concerns and has withdrawn its authorization and support for the Beachcomber organization’s activities within the city while they work through these issues.”

In subsequent letters and emails, Cutter said it appeared that the organization had awarded scholarships to family members or relatives of board members in violation of IRS regulations and asked for more detailed documents on the awards. On Thursday the city posted a long explanation of the issue on its website.

To win back city support, Cutter said the Beachcomber organization will have to:

• Provide an independent accounting report from a third party of financial records during any period of city funding;
• If the audit finds specific violations, a self report to the Oregon Department of Justice’s Charitable Activities division;
• Provide minutes or showing adoption of financial practices into bylaws which will help prevent financial issues in the future; and
• Submit a report showing that all funding to any non-qualifying individuals or expenses was paid back.

“Until that time, city funding is not available, nor is free usage of the cities’ community spaces, nor support for any event using city functions to garner financial support/recognition,” Cutter said in an email.

Cutter said the requirements are only for city support and use of its property, including permits for closing streets.

“Please keep in mind, these requirements are only for city support,” he said. “Any 501(c)3 which wants can totally ignore us … as long as they need nothing from us, it’s their business how they operate.”

In a followup email to the Beachcomber organization Wednesday, Cutter said the reports so far from the organization show confusing entries for Beachcomber Days in June and no expenses or revenue from its other activities such as the Wednesday market or Christmas events.

“… there is significant enough concern to suggest that the financial irregularities uncovered, and the potential misallocation of funds to disqualified family members warrants further independent investigation of compliance by a third party,” the email said. “There may be perfectly valid explanations for all the discrepancies shown. However, in the multiple requests for information and transparency from Beachcombers, we have gotten conflicting information, and finally no response at all since addressing our concerns.”

Issues are a misunderstanding

Beachcomber board president Tammy Abele said Tuesday that the issue “is a straight up misunderstanding” between the organization and the city and that the nonprofit is “100 percent confident this will be resolved.” The board met twice last weekend, but declined repeated requests by YachatsNews to comment further until a Thursday afternoon meeting of the Waldport city council.

On Thursday some 50 Beachcombers volunteers helped fill the council’s meeting room as two Lincoln County Sheriff’s deputies posted themselves at the doors.

Volunteer Jason Vorderbrueggen first read a statement to say the Beachcomber group took the city’s concerns seriously and would work with it to sort out issues and seek reinstatement of its permits, licenses and agreements. The statement also said the organization is:

• Gathering documents to provide accurate financial and board meeting records;
• Seeking an accounting firm to conduct an outside audit; and
• Working with a nonprofit consultant who specializes in governance, accounting and finance to help with the audit and work with the city.

But the statement also said while the city’s two letters “loosely reference inappropriate participation by disqualified individuals” the Beachcomber board had “actively avoided conflicts of interest in all transactions …”

One of four people to address the council on Thursday, Ashley Catalfamo, criticized Cutter for making a public issue out of the city’s concerns instead of handling it internally and then asked if the council has controls over him.

“We need to have a discussion about this,” Catalfamo said. “And if it doesn’t stop it’s going to rip our beautiful community apart.”

Chris Carlson, president of C.P. Carlson Builders and a Beachcomber volunteer, criticized the city manager for asking the community “to not rush to judgement” in the news release announcing the city’s action. 

“So tell me, somebody’s been judged here,” Carlson said. “Whose been judged? It’s everybody in this room. Everybody in this room has been judged and it was a rush to judgement by the guy that said ‘Don’t rush to judgement’.”

Carlson said while he understands the need for proper paperwork and that the city may not have gotten it as soon as it wanted, Cutter should have recognized that Beachcombers is run by busy volunteers.

“You wrote this to us as friends and volunteers … at the same time accusing money not being spent correctly,” he said. “Let’s just call it that. I think if you come from a volunteer standpoint point of view, who would want to volunteer and then be thrown under the bus like this?

“But what a small town won’t stand for is being treated the way we’ve been treated,” he said. “And I think, when this is all over and it comes time to figure out what direction we are going to go with Beachcombers, I think we need to remember who threw the first punch.”

That drew loud applause and then all but a handful of the audience walked out.

Differences over records

The group has a four member board and a 23-member main committee, said Tianne Rios, board secretary. Other board members are Amy Skirvin, the principal at Waldport High/Middle School who organizes the group’s timber show, and Sheila Ping, treasurer.

The organization sent an email this week to Wednesday market vendors saying it the city’s claims were “unsubstantiated” and it intended to clear them up. The email said the organization’s tax documents have been accepted by the IRS, the board has “actively avoided conflicts of interest with all transactions involving disqualified individuals” and that “Our financials are clear and reconciled to our bank account.”

“We intend to clear up these unsubstantiated claims by working with the city to provide detailed and accurate financial data, board minutes and any other supporting documentation,” the email said. “We intend to obtain reinstatement of our permits/licenses/agreements and maintain a positive working relationship with the city council and city manager.”

In the meantime, the group’s plans for its Halloween Trunk or Treat scheduled Oct. 26 at the Waldport Community Center will move to the parking lots of Central Coast Fire & Rescue’s main downtown station.

The nonprofit is not a big money organization, according to the latest IRS 990 form filed in 2023 for the 2022 calendar year.

According to that filing, Beachcomber Days started 2022 with $32,679 in the bank, took in $18,800 in contributions and grants, but spent $39,279 for grants and other expenses, for a balance at the end of 2022 of $12,363.

The city of Waldport gave Beachcombers $2,500 last fiscal year and has $2,500 set aside for the group in its 2024-25 budget. But it also issues permits for Beachcombers to use the community center’s parking lot, close streets for the big celebration in June, and has set aside an area in the new Louis Southworth Park to run its timber festival.

Other than expenses to stage the various events, proceeds from the organization’s fundraising goes to scholarships for Waldport students. This year Beachcomber awarded $16,000 in scholarships to 15 students that ranged from $3,800 to a graduating senior to $75 to an eighth-grader.

The city is concerned that Beachcombers has awarded scholarships to children of board members – apparently a practice not allowed under Internal Revenue Service regulations of nonprofits. A list of which students or what other organizations got Beachcomber grants was not included in the IRS’ required Schedule O that is supposed to be filed with the 990 form.

Cutter told YachatsNews that Beachcomber officers later sent him a list of scholarships it awarded this year, but identified the recipients only by initials. He has asked for a revised Schedule O that names all the recipients for the past four years to check to see if they are related to board members or major donors.

“We’re just trying to do our due diligence,” he said.

• Quinton Smith is the editor of YachatsNews.com and can be reached at YachatsNews@gmail.com
• Garret Jaros is YachatsNews’ full-time reporter and can be reached at GJaros@YachatsNews.com